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RealTime Economic Issues Watch

In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.

Recent Posts

Europe’s Capital Markets Union and the New Single Market Challenge

by | September 30th, 2015 | 06:48 pm

The European Union has started a conversation on reforming its capital markets which raises difficult questions about market integration in regulated services sectors, of which finance is one. Powerful political constraints, currently centered on (but not limited to) the United Kingdom, prevent the European Union from creating pan-European agencies for regulatory enforcement. But decentralized enforcement […]

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Brazil Needs to Abandon Inflation Targeting and Yield to Fiscal Dominance

by | September 30th, 2015 | 10:51 am

What happens when efforts to combat inflation collide with government deficits so large that they force the central bank to buy up debt, print money, and thereby drive up inflation? Economists describe this as a collision between inflation targeting and fiscal dominance. Some studies (Kumhof et al. 2008)1 have focused on such cases as examples […]

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A Non-Circuit Breaker Agenda for Brazil

by | September 25th, 2015 | 02:34 pm

Mohamed A. El-Erian, one of the world’s most respected emerging markets experts, writes that Brazil needs a “circuit breaker” to halt the vicious cycle that has trapped its economy. Brazil’s turmoil—a shrinking GDP, soaring public and private debts, high interest rates, a depreciating currency, and a corruption scandal—is attributed by El-Erian (in an op-ed in […]

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A Greek Election Result that Signals the End of the Euro Crisis

by | September 21st, 2015 | 03:45 pm

Greek voters delivered a resounding victory to Prime Minister Alexis Tsipras and his Syriza party on September 20, despite a record low voter turnout of 55 percent. Syriza’s 35.5 percent of the vote replicated its achievement in January 2015. Compounding his victory was the failure of the leftwing breakaway Popular Unity party under former energy […]

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When Will Russia-China Trade Hit the $100 Billion Mark?

by | September 21st, 2015 | 10:56 am

In June 2011, at a meeting in Moscow, Russian and Chinese presidents Dmitry Medvedev and Hu Jintao set targets of achieving $100 billion in bilateral trade by 2015 and $200 billion by 2020. Initially, the two countries were on track to meet these goals. More recently, this task has become impossible, because of falling energy […]

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PIIE Chart: Brazil’s Downgrade

by | September 16th, 2015 | 11:11 am

Standard & Poor’s brutal downgrade of Brazil’s sovereign credit rating on September 9 is testament to the country’s untenable situation. Political gridlock and the lack of a coherent fiscal strategy were the basis for the downgrade from investment to speculative grade, accompanied by a negative outlook that clearly underscores lack of confidence over the government’s […]

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A Balanced View of the Economics of Independence in Catalonia

by | September 15th, 2015 | 11:21 am

Two years after voters in Scotland rejected independence from the United Kingdom, Spain faces the threat of breakup as Catalonia holds regional elections on September 27. The Catalan president, Artur Mas, leads a pro-independence coalition for these elections, Junts pel Si (Together for Yes), with a single aim: to start a process of independence culminating […]

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The New Silk Road and Eastern Europe

by | September 8th, 2015 | 04:53 pm

In April 2012, when serving in the Bulgarian government as deputy prime minister and minister of finance, I received an unexpected call from my prime minister: to get on a plane immediately and participate in a China–Eastern Europe economic forum the next morning in Warsaw. The forum was hosted by Polish prime minister Donald Tusk, […]

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How Russia Is Using Chinese Largesse to Circumvent the West’s Sanctions

by | September 3rd, 2015 | 02:52 pm

China has been energetically touting the benefits of its New Silk Road initiative, which aims to spend $40 billion a year to link Europe and Asia via roads, rail, and water. The stated goal is to open a whole region—Central and South Asia—to the world.1 The goal, China says, is to cut transport times for […]

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A Greek Election that Should Strengthen Tsipras’s Hand

by | August 21st, 2015 | 03:44 pm

For the third time this year, Greek voters will be going the polls, this time to elect a new Parliament on September 20 in the wake of the €86 billion bailout accord with European creditors and Prime Minister Alexis Tsipras’s resignation. But the most likely outcome for this election will be to strengthen Tsipras’s hand […]

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